Speaker 1: From Marhart where Innovation, money and power Collie in Silicon
Speaker 1: Vallet NBN. This is Bloomberg Technology with Caroline Hyde and
Speaker 1: Ed Ludlow.
Speaker 2: Live from New York and San Francisco.
Speaker 3: This is Bloomberg Technology coming up and Vidio needs benchmarks
Speaker 3: in a big week for markets as investors, a weight
Speaker 3: economic data and a fed Pal speech.
Speaker 2: Out of Jackson Hole.
Speaker 4: Chinese tech stock sink overnight the latest and why Walmart's
Speaker 4: three point six billion dollar JD dot com steak sale
Speaker 4: has put e commerce companies under pressure, and Ford pulls.
Speaker 3: Back further from vs scrapping an all electric suv and
Speaker 3: taking a one point nine billion dollar charge to shift strategies. Again,
Speaker 3: that's all to come a first as checking on these markets.
Speaker 3: Some economic data that we are currently digesting is their
Speaker 3: revisions to the jobs data. And yes they're more than
Speaker 3: eight hundred thousand, but not enough to really change the
Speaker 3: dynamic move of the markets right now. Are still holding
Speaker 3: onto our gains up a tenth of a percent, yes,
Speaker 3: and come off the highs, but still managing to cling
Speaker 3: on to an upcycle when it comes to the technology
Speaker 3: name stock six hundred over in Europe, also powering ahead,
Speaker 3: Rock six tens percent. Interestingly, a rebound in Chinese tech
Speaker 3: names as well. I shine a light on the Nasdak
Speaker 3: Golden Dragon, which I know you're going to dig into
Speaker 3: some individual moves of ED, but yesterday under pressure, today's
Speaker 3: still some individual names we're going to be shining a
Speaker 3: light on and just take talk us through what you're
Speaker 3: watching ED.
Speaker 4: Yeah, I mean overnight, a lot of pressure on Hong
Speaker 4: Kong listed tech shares. Why Walmart made three point six
Speaker 4: billion dollars selling out of its stake in JD dot
Speaker 4: Com actually JD confirming through the Hong Kong Exchange that
Speaker 4: wal might no longer hold a steak.
Speaker 5: We're going to hit that.
Speaker 4: Story hard throughout the hour with our reporters who are
Speaker 4: on it. But it's interesting to see, at least with
Speaker 4: JD dot COM's ADRs. The pressure in videos top of mind.
Speaker 4: And again we're at like one hundred and twenty nine
Speaker 4: dollars a share, one hundred and twenty seven dollars a share,
Speaker 4: not far off that one hundred and thirty five dollars
Speaker 4: a share record we hit in June. There is a
Speaker 4: lot of anticipation ahead of next week's earnings. August twenty
Speaker 4: eight far after market in whether in video will get
Speaker 4: back to that record level record heights led the market
Speaker 4: right in this rebound we've seen since August or the
Speaker 4: beginning of August, there's a lot of hope where the
Speaker 4: hope translates to confidence.
Speaker 3: Who knows, Carol, Yeah, and let's dig in to one
Speaker 3: of the key stories being written on the terminal today
Speaker 3: by our own round Lostellica joining us to already pass
Speaker 3: through what the market sentiment is around in video whether
Speaker 3: it can bring this macro level event come August the
Speaker 3: twenty eighth.
Speaker 2: And you talked to some key balls.
Speaker 6: Out there, Yes, good morning, thanks for having me. So
Speaker 6: it does seem like there is growing confidence that the
Speaker 6: spending on AI, which has been really the central ball
Speaker 6: thesis behind in video and really a major driver behind
Speaker 6: overall tech games. People are pretty confident that spending is
Speaker 6: going to remain pretty consistent. There were some concerns earlier
Speaker 6: this month about how much ROI are these companies seeing
Speaker 6: out of their.
Speaker 5: AI investments so far.
Speaker 6: The general thesis seems to be that even if the
Speaker 6: ROI is a little bit delayed and it doesn't start
Speaker 6: showing up in growth and improved efficiency for maybe a
Speaker 6: few more quarters or even longer than that. There's still
Speaker 6: going to be a ton of demand for these AI
Speaker 6: chips and hardware and infrastructure, and that kind of tail
Speaker 6: one is going to continue supporting Nvidia at least in
Speaker 6: terms of its growth.
Speaker 1: Right.
Speaker 5: It's what for counting.
Speaker 4: What's happened just in the last couple of weeks sold
Speaker 4: me through the rally, the rebound in Nvidia shares.
Speaker 1: Yeah.
Speaker 5: Absolutely so.
Speaker 6: We did see some pretty broad based weakness earlier in
Speaker 6: this month. Some of that was related to the end
Speaker 6: and just something else, you know, just other factors like that,
Speaker 6: some concerns about valuation, but we did see a pretty
Speaker 6: dramatic rebound. We also had the megacap results that we
Speaker 6: saw out last month. All the major Nvidia customers like Microsoft, Amazon, Alphabet, Metay,
Speaker 6: we know, really kind of reagread.
Speaker 5: That they're going to continue spending on this.
Speaker 6: And I think those two things just people looking for
Speaker 6: a dip to buy and then that sort of spending tailwind.
Speaker 6: The confluence of those two things really, you know, spurred
Speaker 6: investors to buy the dip on in video and you've
Speaker 6: seen the stock just jump up I think about thirty
Speaker 6: percent or so off that low earlier this month.
Speaker 3: It's interesting that chip makers have been what of dictated where.
Speaker 2: The nazag one hunter is gone and broad on.
Speaker 3: Many on this show call it sort of the poor
Speaker 3: man's in video, and people have been buying into that name.
Speaker 3: I'm looking at Texas Instruments today and actually here's a
Speaker 3: company that's curtailing some of its capital expenditure, which people
Speaker 3: are worrying about too much of in the hyperscaler's area.
Speaker 2: What do you make of TI today, Yeah.
Speaker 6: So they are kind of maybe pulling back in their capex.
Speaker 6: There's some optimism that that's going to lead to some
Speaker 6: improved free cash flow for them. So a little bit
Speaker 6: of a different kind of player. They're not as active
Speaker 6: in AI, certainly not to the extent that in video
Speaker 6: or AMD or some of these other major players are,
Speaker 6: but it does seem like people are looking to them
Speaker 6: just as a way to improve their free cash flow.
Speaker 6: And that's why we're seeing a little bit of a
Speaker 6: lift in that stock today. And we saw that city
Speaker 6: upgrade of the stock kind of expecting improvement in margins,
Speaker 6: improvement in cash flow, all related to its capex comments
Speaker 6: Ran it's.
Speaker 3: A great story on Nvidia talking to so many money
Speaker 3: managers on both sides, and indeed, the LATESTU on Texas Instruments,
Speaker 3: we thank you Ron for SELICA. Now let's dig more
Speaker 3: into some of the individual names and indeed the broader
Speaker 3: market with Kevin Welkosh. He's the portfolio manager of it
Speaker 3: GENS and Investment Management covering tech, AI and chips, who
Speaker 3: are the perfect sort of person that we need to
Speaker 3: speak to when many are wondering what the return on
Speaker 3: investment of AI is for you? Is infrastructure picks and
Speaker 3: shovels still the good place to be allocating.
Speaker 7: Right when we think about it. So what with GENS
Speaker 7: in investment management, we're focused on quality investing, We're focused
Speaker 7: on a long term we think right now sort of
Speaker 7: the AI attention certainly is more in the short term
Speaker 7: in terms of CAPEX band and demand for Nvidia chips,
Speaker 7: but historically that the chip industry is very cyclical and
Speaker 7: we're looking for sort of those platform players that can
Speaker 7: kind of continue to monetize consistently over the long term.
Speaker 7: So when we think about today, certainly the intensions on Nvidia,
Speaker 7: but we're really looking more towards the long term, So
Speaker 7: that would be the Microsoft's really establishing themselves with that
Speaker 7: massive CAPEC spend. We're also seeing it on alphabet side,
Speaker 7: the alphabet side where you know, again that investment's building
Speaker 7: that beachhead for long term monetization.
Speaker 1: We also like Accentrire.
Speaker 7: We think Accenture from an AI story has sort of
Speaker 7: been really misunderstood by the market in our opinion. When
Speaker 7: we look at Accenture right now, we think the mart
Speaker 7: the market, which we continue to think as a long
Speaker 7: term investor, we tend to think of it as very
Speaker 7: short term focused, tends to focus on a little bit
Speaker 7: of slowdown in it. Spend has sort of, you know,
Speaker 7: unduly hammered the stock in our opinion, And when we
Speaker 7: look at Accenture, they've committed to the spending three billion
Speaker 7: to tool up for AI. They were a market leader
Speaker 7: in terms of cloud build significant share when they did
Speaker 7: a large investment like that as well, and we would
Speaker 7: expect them as sort of a picks and shovels type
Speaker 7: company to really benefit in a long term from AI
Speaker 7: as an implementer in that they don't really have to
Speaker 7: pick the winner, they just have to continue to be
Speaker 7: very good at implementing the tech.
Speaker 4: Kevin I didn't expect us to jump straight in on
Speaker 4: an accenture. I'll be honest with you. It's a pretty
Speaker 4: big week economic data, power speaks and everyone has a
Speaker 4: lot of anxiety about in Vidia on August twenty eighth,
Speaker 4: which is the most important for you.
Speaker 5: I mean for us.
Speaker 7: When we look at Nvidia, it's interesting, but we don't
Speaker 7: own in video, and when we think about the market,
Speaker 7: you know, it's been very binary, handful of AI driven
Speaker 7: stocks and really sort of missing sort of the broader
Speaker 7: value creation across the market as a whole. So in
Speaker 7: this case, you know, we certainly acknowledge in VideA. We'll
Speaker 7: understand how it contextually sort of can impact our portfolio.
Speaker 7: What we're sort of keyed in on the short term
Speaker 7: is just sort of continuation of that sort of trend
Speaker 7: and migration from a long term perspective towards AI, but
Speaker 7: also broader tech and seeing how healthy it is in
Speaker 7: terms of growing.
Speaker 5: So that's that's about it.
Speaker 7: It's sort of contextually looking at the short term, but
Speaker 7: really with an eye towards the long term.
Speaker 3: I'm really interested in that that you're not in in video,
Speaker 3: but you are in alphabet, Microsoft TSMC. The likes of
Speaker 3: Eccentia Texas Instruments, maybe less so on the AI side,
Speaker 3: but the others are AI names.
Speaker 2: Why are you in Nvidia?
Speaker 7: So what's interesting about our strategy very inherent in terms
Speaker 7: of us.
Speaker 5: In our sort of quest for.
Speaker 7: Long term quality growth businesses, we look for companies that
Speaker 7: have high returns on capital and consistently, so we're looking
Speaker 7: for companies that have return and excess of fifteen percent
Speaker 7: return on equity for ten years. So it's not an
Speaker 7: average every year as to hit it's supposed to the
Speaker 7: ten years. It is supposed to denote an all sort
Speaker 7: of market type environment of high capital returns. And Nvidia
Speaker 7: had not up until this most recent fiscal year qualified
Speaker 7: and so in that case it does qualify. Now we
Speaker 7: are actually researching it. Our sense when we look at
Speaker 7: the valuation would be that from a fundamental standpoint, we'll
Speaker 7: probably like it. But I think from a valuation standpoint
Speaker 7: for us too rich to sort of enter position.
Speaker 4: Right now, Kevin, The nvidious side of the equation on
Speaker 4: AI is easy to understand. The capex investment on airastructures
Speaker 4: there if you go back to your accenture example, I
Speaker 4: find really interesting where people struggle is to see the
Speaker 4: top line growth coming out the other side, those that
Speaker 4: are working on AI services and products, do you see it.
Speaker 7: It's early days we've seen.
Speaker 8: What's interesting is is you look.
Speaker 7: At the growth in terms of AI projects and spend
Speaker 7: for Accenture has been growing dramatically and so but relative
Speaker 7: to total revenue it's not as large yet. And that's
Speaker 7: typically what we've see in these sort of early adoptions
Speaker 7: of new, newer or new technologies. You sort of see
Speaker 7: small base, large growth, and right now, relative to the picture,
Speaker 7: it looks small. And I think the market, you know,
Speaker 7: from our perspective and we look at it, you know,
Speaker 7: the market's so focused on short term gains that in
Speaker 7: essence sort of looking at the trees, and we're trying
Speaker 7: to look at the forest. And we like the trends,
Speaker 7: we like the direction, and having been invested in this
Speaker 7: company for a long time and seeing this sort of
Speaker 7: play out before in other tech trends, we're incredibly excited
Speaker 7: about the opportunities that had for Accenture.
Speaker 3: Kevin Welcos great to have some time with you. Thank you,
Speaker 3: portfolio manager. Thanks and Jensen making investment management. Now we
Speaker 3: shift gears a little here because Italian divers have now
Speaker 3: been joined by an underwater robot as the search and
Speaker 3: rescue efforts resumed for a third day around the sunken
Speaker 3: yacht off Sicily. A British tech entrepreneur, Mike Lynch will
Speaker 3: we stand the international chairman, Jonathan Bloomer, and four others
Speaker 3: are feared to have died earlier this week. The robot
Speaker 3: is capable of operating on the seabed at a depth
Speaker 3: of up to three hundred meters for between six and
Speaker 3: seven hours as his authorities continue to investigate just how
Speaker 3: the luxury yacht sank in the early hours of Monday morning.
Speaker 3: Will keep you up to date on the latest from
Speaker 3: this tragedy.
Speaker 5: Ed okay coming out.
Speaker 4: Walmart ends its partnership with JD dot Com in China.
Speaker 4: Details on how Walmot's refining its strategy in that country.
Speaker 5: Next, this is Bloomberg Technology.
Speaker 3: Let's return to JD dot Com and the pressure there
Speaker 3: because Walmart actually sold out, raising about three point six
Speaker 3: billion dollars by selling its stake in the Chinese e
Speaker 3: commerce firm, and the move winds down an eight year
Speaker 3: partnership that appears to be paying diminishing returns and pretty
Speaker 3: challenging landscape for Chinese tech giants.
Speaker 2: Bloomberg's Amy Or has more of the details.
Speaker 3: A lot of pressure on the shares of JD dot
Speaker 3: Com for obvious reasons, but it's really sending slight shot
Speaker 3: waves across the entire industry group. People are worried about
Speaker 3: what the signals for JD dot com and its growth.
Speaker 9: Yeah, well, especially at a time when Chinese economy is slowing,
Speaker 9: and also like it's been reflected in e commerce, and
Speaker 9: also it really shows that US companies can actually go
Speaker 9: their own way.
Speaker 2: It's not like eight years ago.
Speaker 9: When the partnership started that you really need a local
Speaker 9: partnership to really gain popularity among Chinese consumers. And now
Speaker 9: Sam's Club has actually got really good recognition amound Chinese
Speaker 9: customers as well.
Speaker 5: This is good point.
Speaker 1: Amy.
Speaker 4: You know, in your reporting you give the backstory of
Speaker 4: Walmart in China, which is about eight years of partnership
Speaker 4: with JD dot Com, but their kind of hypermart business
Speaker 4: is strong.
Speaker 5: Sources talk to us about that.
Speaker 9: What did you learn, So essentially the partnership in the past,
Speaker 9: it was great. It started off as trying to get
Speaker 9: Chinese customers to actually recognize is brands and try to
Speaker 9: gain shares that it might not have been able to
Speaker 9: without a Chinese partner. But now that kind of growth
Speaker 9: has slowed together with the Chinese economy slowing as well.
Speaker 9: And then Sam's Club essentially is the only one of
Speaker 9: the top five e commerce platforms in China that recorded
Speaker 9: growth that really shows that it can actually go alone,
Speaker 9: and it probably should go alone. And essentially the three
Speaker 9: point six billion that it got can actually put to
Speaker 9: better use.
Speaker 4: YEP, that'll help Bloomberg's Amy or who broke the story
Speaker 4: last night, Thank you. Another one that we're watching Ford
Speaker 4: recalibrating its EV strategy again. This time you also makers
Speaker 4: canceling plans for his fully electric suv, a move that
Speaker 4: could cost the company nearly two billion dollars Bloombos.
Speaker 5: Keith Norton is here with more.
Speaker 4: Oh, Keith, it feels just like yesterday that you and
Speaker 4: I were reporting that Ford was going to focus its
Speaker 4: EV units separate away from everything else, and now it's
Speaker 4: a change. I think you spoke to the CEO, Jim Farley,
Speaker 4: what's the rationale here?
Speaker 10: Well?
Speaker 11: And they are trying to find profitability for that EV
Speaker 11: unit that they broke off. Two years ago when we
Speaker 11: reported on that they're expecting that unit known as MODELI
Speaker 11: to lose as much as five point five billion dollars.
Speaker 10: This three row suv that they've canceled.
Speaker 11: They said that Jim Farley told me they just couldn't
Speaker 11: find a way to make it profitable. It requires a
Speaker 11: very large battery, which is high cost, and they can't
Speaker 11: put it out there with all the competition in the
Speaker 11: market requiring price cuts.
Speaker 10: On e these, so they canceled it.
Speaker 11: And they're looking at perhaps doing an extended range electric
Speaker 11: vehicle technology on that.
Speaker 3: Yeah, Jim Vinie actually saying that we loved our three
Speaker 3: road crossover. He was so excited to show it to everyone,
Speaker 3: but they couldn't get it to be profitable. It feels
Speaker 3: as though once again hybrid is where it's at.
Speaker 11: Yes, they're seeing a lot of growth in hybrid, and
Speaker 11: Farley in particular is really enthused by eravs, this extended
Speaker 11: range electric vehicle, which is where you have a gas
Speaker 11: engine that sole purpose is to just recharge the battery.
Speaker 11: It doesn't drive the wheels, so you're really in electric
Speaker 11: mode most of the time. He saw those of her
Speaker 11: in China. He really wants to get them in the
Speaker 11: Ford lineup, and we may see it as that three
Speaker 11: row suv eventually.
Speaker 4: That's something that's popular in China, and a number of
Speaker 4: the Chinese domestic manufacturers have a thought about that. I mean,
Speaker 4: what I don't understand, Keith, is whether this will ever
Speaker 4: be a place where Ford just does evs. I thought
Speaker 4: that that was the transition plan, right, profit from pickups
Speaker 4: funds the transition long term to evs. Now it seems
Speaker 4: like that's not as clear cut, right it.
Speaker 11: Is not ed, and the new plan really is leans
Speaker 11: on hybrids more, which Ford has been in the business
Speaker 11: of doing for a long time. In the EV space.
Speaker 11: They're looking to do smaller evs and they're really looking
Speaker 11: at advances in battery technology. They have LFP batteries coming
Speaker 11: out of plant in Michigan that will power a new
Speaker 11: medium size pickup truck.
Speaker 10: Ed pickup truck will have in twenty twenty seven.
Speaker 11: Jim Farley told me that the total cost of owner
Speaker 11: of that truck with those lower cost batteries will actually
Speaker 11: be cheaper than traditional vehicles.
Speaker 2: He called us a tremendous pivot. Is this an embarrassment, Keith?
Speaker 3: Is this something that Jim's worried about investor reactions one Tim.
Speaker 11: Well, so far investors have reacted positively. The stock is
Speaker 11: up today.
Speaker 10: I guess there's a couple of ways to look at it.
Speaker 11: It's certainly embarrassing that everyone got so caught up in
Speaker 11: the hype that they started building plants and building battery
Speaker 11: factories everywhere and now have to scale back.
Speaker 10: But for it at least has acknowledge the need to
Speaker 10: do that.
Speaker 11: They've been sort of out front saying no, we need
Speaker 11: to change, and they've been sort of chipping away at it,
Speaker 11: and now they've done this whole plan that he says
Speaker 11: he thinks will be the final move.
Speaker 10: We'll see.
Speaker 3: It's a big cost to have to sucker once again,
Speaker 3: Keith Norton quite importing me. Thank you so much for
Speaker 3: joining us on.
Speaker 4: It time for AI in Action, and today we're looking
Speaker 4: at the rising risks of AI in cybersecurity and how
Speaker 4: one company aims to fight fire with fire in combating
Speaker 4: the threats. Joining us now is Evan Reiser, Abnormal Security CEO.
Speaker 4: A Normal recently hit a five point one billion dollar
Speaker 4: valuation and it's latest Series D fundraise, and I think
Speaker 4: that the story here is actually pretty clear that the
Speaker 4: tools available to your industry in defense are also available
Speaker 4: to the threat actors. Right that AI has given them
Speaker 4: something to work with, and that's kind of what you're
Speaker 4: trying to combat.
Speaker 12: Evan, That's absolutely right. You know, AI is an extremely
Speaker 12: powerful technology. Like all technology, it's a tool, and tool
Speaker 12: could be used for good or evil. Unfortunately, you know,
Speaker 12: criminals are faster adopting technology, and they're using new AI
Speaker 12: technologies to do more bad things.
Speaker 2: You've got twenty four hundred plus customers. How are they
Speaker 2: using you?
Speaker 3: Because ultimately you're trying to predict me, the human and
Speaker 3: when I start to act in a strange way, right.
Speaker 5: Yeah, in an abnormal way. So that that's correct.
Speaker 12: So you know, if you look, you know, decade ago,
Speaker 12: criminals are very focused on attach infrastructure. Now they've moved
Speaker 12: on to the more vulnerable target, which is people, and
Speaker 12: we see you know, social enduring, fraud, fishing, those are
Speaker 12: the biggest forms of cyber attacks, number one cause of breaches.
Speaker 12: Just like you said, abnormals focused on understanding human behavior,
Speaker 12: you know, better than humans, so we can protect humans.
Speaker 4: What I understand Evan is you've got a really impressive
Speaker 4: annual revenue run rate two hundred million dollars. Right, Why
Speaker 4: is it such a vacuum for you to jump into?
Speaker 4: It seems like we've been talking about the AI story
Speaker 4: for a few years, let's say two or three years,
Speaker 4: and now everyone's like, Okay, I need to think about
Speaker 4: the threat before me.
Speaker 5: Why not do it earlier?
Speaker 1: Yeah?
Speaker 12: I think there's two reasons. One is that with the
Speaker 12: rise of these new technologies, it's very easy and accessible
Speaker 12: for criminals to you know, supercharge their attacks. We've seen
Speaker 12: this rise of social enduring and fishing over the last
Speaker 12: couple of years. As Ano there's still the number one cybercrime,
Speaker 12: but now any petty criminal can use chat GBT. They
Speaker 12: can send emails in perfect English, with perfect grammar, with
Speaker 12: context about their victims. And these new technologies allow criminals
Speaker 12: to personalize at scale, and that is very hard to
Speaker 12: defend against. The reason it's really hard is that conventional
Speaker 12: cybersecurits focus on threat intelligence, kind of studying all the
Speaker 12: known bad attacks blocking the existing attacks. And so this
Speaker 12: is why it requires a new technology that's not focused
Speaker 12: on known bad but instead of really good at understanding
Speaker 12: known good, understanding human behavior and then looking for those
Speaker 12: anomalies and abbormalities the basis for threat detection.
Speaker 3: Can you explain a little bit of the underlying technology
Speaker 3: of how you're working that, So, what are you applying
Speaker 3: and ultimately why just raising more money help you.
Speaker 2: Beef that up.
Speaker 1: Yeah.
Speaker 12: So at the core, you know, we're really an artificial
Speaker 12: intelligence company that builds cybersecurity products, and the core technology
Speaker 12: is focused on really understanding human behavior. By integrating all
Speaker 12: kinds of enterprise technology systems, we understand the baseline activity,
Speaker 12: who talks to who about what types of things, what
Speaker 12: business processes. We can map out the supply chain all
Speaker 12: thesing artificial intelligence. We then take that behavioral baseline it
Speaker 12: like for anomalies. And so that's a very's very effective
Speaker 12: at stopping these personalized social engineering phishing attacks I've never
Speaker 12: been seen before, and so it's a kind of a
Speaker 12: really new paradigm.
Speaker 10: For how to do cybersecurity.
Speaker 12: And then I think that the final reason is that
Speaker 12: conventional cybersecurity is very reliant on you know, kind of
Speaker 12: a human powered paradigm, right, lots of human analytic analyzing,
Speaker 12: lots of data. Obviously, machine learning and AI is you know,
Speaker 12: far superior, faster and more effective at doing that, and
Speaker 12: so AI allows us to make you know, superhuman judgments,
Speaker 12: you know, faster than faster than conventional security operations. So
Speaker 12: not only is it a bigger need in the market,
Speaker 12: but new tools allow you know, organizations like us to
Speaker 12: you know, become way, you know, an order magnitude more
Speaker 12: effective at stopping these cyber attacks.
Speaker 3: So to become ever more effective, do you need more people,
Speaker 3: more talent, or do you need more compute more money
Speaker 3: for that?
Speaker 12: It's a bit of everything, right, you know, we just
Speaker 12: raised this big ground. As you mentioned, there's really kind
Speaker 12: of three ways we're planning on doing what you're planning
Speaker 12: on growing the business. One is just you know, growing
Speaker 12: into new markets where you're very West based focus. We're
Speaker 12: explading international in Asia and Europe. The second is we
Speaker 12: do need to grow our team. We want to go
Speaker 12: get the world's best you know leaders in technology and beyond.
Speaker 12: And the third is you know, making more investments in
Speaker 12: that core end platform and then using that to build
Speaker 12: you know, expand our product based beyond you know email security,
Speaker 12: which are known for it protect other surface areas across
Speaker 12: the organization.
Speaker 2: I'm a riser.
Speaker 3: Great to have some time with you I'm Normal Security CEO.
Speaker 3: Welcome back to Bloomberg Technology. I'm Carolin Hyde in New
Speaker 3: York and I'm.
Speaker 5: Ed Ludlow in San Francisco.
Speaker 3: Quick check on the sentiment of these markets right now, ed,
Speaker 3: because we are coming off of what have been a
Speaker 3: slightly stronger rally prior to the jobs revisions data that
Speaker 3: we eventually got more than eight hundred thousand jobs, fewer
Speaker 3: than we had previously been seeing. Yes, we knew that
Speaker 3: revisions were to come, but this is being seen as
Speaker 3: a soft data point. The Federal Reserve therefore probably can
Speaker 3: still cut into this. I'm looking at to is our
Speaker 3: sentiment gage, and we're up four tens percent, but we're
Speaker 3: down of our hives. Some interesting stories also around a
Speaker 3: pretty crowded trade and trade in derivatives, basically showing that
Speaker 3: maybe we're going to could get a short squeeze if
Speaker 3: we've got any more volatility in this market as people
Speaker 3: do go short the asset. Let's move on to some
Speaker 3: of the individual movers in the stocks perspective. Microship Technology
Speaker 3: individual mover here on the back of a cyber attack,
Speaker 3: the microchip company, which basically supplies the US defense interestry,
Speaker 3: saying they were hit. The servers were hit by a
Speaker 3: cyber attack. City saying, look, this is only gonna be temporary.
Speaker 3: Nature are actually up more than two percent. Intuitive Machines.
Speaker 3: This was up more than forty percent yesterday. Remember the
Speaker 3: rover that they had been sending to the moon. This
Speaker 3: space based company is currently down, just as we perhaps
Speaker 3: see a bit of profit taking. I'm looking at dd
Speaker 3: Global as well, just up two and a half percent
Speaker 3: in the moment.
Speaker 2: Well, they come out and finally turn a profit.
Speaker 3: It's small, one hundred ninety six million dollars, but better
Speaker 3: as revenue climbs more than four percent end.
Speaker 2: But we got more on China.
Speaker 4: Yeah, as we said, tech stock slumped after Walmarts sold
Speaker 4: its stake in JD dot Com.
Speaker 5: Also, some key.
Speaker 4: Tech players in China have posted port earnings of late
Speaker 4: Let's get the details with Bloomberg's Isabelle Lee. And it
Speaker 4: was interesting when the Bloomberg reporting hit on the Walmart
Speaker 4: JD steak because actually ripples were felt very quickly across
Speaker 4: Chinese or at least Hong Kong listed equity markets for China.
Speaker 13: Tech.
Speaker 5: Good morning, what did you see?
Speaker 14: We have shares of Jada dot com slumping and it's
Speaker 14: not a surprise because this is an eight year partnership
Speaker 14: between Walmart and JD dot Com, and when Walmart's sold,
Speaker 14: it's roughly three point six billion steak that's at an
Speaker 14: eleven percent discounts, so it seems to be paying diminishing returns.
Speaker 14: This began in twenty sixteen when we have JDA dot
Speaker 14: Com taking over one of Walmart's online marketplace, so this
Speaker 14: focused on selling groceries to hire end shoppers, mostly female
Speaker 14: in major Chinese cities, and Citygroup said this was a surprise.
Speaker 14: We have Bloomberg Intelligence saying that even if they renew
Speaker 14: this eight year non compete contract that is existing right
Speaker 14: now and it ends in twenty twenty four, the terms
Speaker 14: for JD dot Com may not be as favorable. And
Speaker 14: Jeffries also said that you see the drop in JD
Speaker 14: dot Com mainly because of the unexpected of it all.
Speaker 14: And to your point, it's really been a tough year
Speaker 14: or few years for China tech because mostly all of them,
Speaker 14: I don't want to say all of them, most of
Speaker 14: them are really struggling, and particularly.
Speaker 3: When those are exposed to consumption in China. Whip Shop,
Speaker 3: for example, rebounds today yesterday sunk hard on the back
Speaker 3: of its earnings.
Speaker 14: Yes, exactly because it as a broader economy.
Speaker 2: China is still struggling. We have job.
Speaker 14: Prospects, especially for the youth, still uncertain, the property crisis
Speaker 14: day in and day out, it's still there. And we
Speaker 14: also have just the economy. It's not doing well. And
Speaker 14: so this all affects consumer consumption. And we had a
Speaker 14: slew of earnings from Ali Baba, JD dot Com and
Speaker 14: even PDD. And I must know that last week Ali Baba,
Speaker 14: which is long seen as a barometer for Chinese health,
Speaker 14: it's a price investors, when it said its main business,
Speaker 14: commerce shrunk last quarter. So what does that tell you?
Speaker 14: And it really shows the divergence between what we see
Speaker 14: in the US and what we see in China. And
Speaker 14: Walmart in a statement, said that they want to focus
Speaker 14: on their own business and want to reallocate the other
Speaker 14: to other funds, likely the Sam's Club franchise they have,
Speaker 14: which is doing well in China. But Walmart did call
Speaker 14: the partnership with JD dot Com pressure, so there's that,
Speaker 14: and it said it will continue to cooperate.
Speaker 5: I mean, is weel you know me? I love a chart.
Speaker 4: I think that chart on your screen is one of
Speaker 4: the stories, at least for this sort of second quarter
Speaker 4: of this calendar year. Look at the Nasdaq and then
Speaker 4: look at Hanseng Tech. Just go a bit deeper into
Speaker 4: into the outperformance of US listed technology shares and some
Speaker 4: of the struggles of China or at least Hong Kong
Speaker 4: listed tech.
Speaker 14: We have the Chinese Golden Dragon Index down twelve percent
Speaker 14: year today, down fourteen percent in the past twelve months,
Speaker 14: and compare that with the Nasdaq and the S and
Speaker 14: p's double digit game this year. Whether it's seventeen percent
Speaker 14: twenty percent, it's really a story of how US technology
Speaker 14: companies are outperforming the rest of the world. And I
Speaker 14: think it's not even a China story where China is
Speaker 14: stuck in their doll drums, although that's one thing. It's
Speaker 14: just really how this is a US story at the
Speaker 14: end of the day, even Europe can't compete, even Asia,
Speaker 14: it's US, and guest companies in the world are in
Speaker 14: the US. Whether that rally will continue as we know
Speaker 14: that the AI halo is fading sort of for a
Speaker 14: while now, but still you cannot deny that US is
Speaker 14: really the bright spot in the rest of the world,
Speaker 14: at least the tech companies.
Speaker 2: It's WELLI great to have you on. We thank you.
Speaker 3: We're gonna look at China in a different perspective right
Speaker 3: now because we're looking at the release of China's biggest
Speaker 3: PC game to date, Black Myth Wukong, the game about
Speaker 3: by ten Cent Remember, has become a bit of a sensation,
Speaker 3: more than two million players trying out the game in
Speaker 3: the first day alone in its global launch. It's called
Speaker 3: in to stream dB. It's a strong first day performance
Speaker 3: and of course it could shore up expectations for China's
Speaker 3: forty billion dollar plus gaming arena after years of regulatory scrutiny.
Speaker 3: Let's bring in Nissa Christmas Hansen, CEO of Nico Partners
Speaker 3: for more you really understand and deep dive on the
Speaker 3: China element of gaming. What is the China consumer showing
Speaker 3: you when it comes to a desire to get into gaming.
Speaker 2: They don't seem to be reticent there.
Speaker 13: Hi, Yeah, the Chinese consumer has always been.
Speaker 8: Avid for gaming. They are They find that gaming.
Speaker 13: Is an inexpensive form of digital entertainment. It's very social
Speaker 13: and the higher the quality of the games, the more
Speaker 13: these high demanding gamers will throw themselves into them and
Speaker 13: spend a lot of money, and Black Myth Wukong is
Speaker 13: just a perfect example of that.
Speaker 8: It's a perfect example.
Speaker 13: Of lots of things like Chinese game development prowess, how
Speaker 13: Chinese game developers are really world class, and how a
Speaker 13: relatively unknown company like Game Science.
Speaker 8: Which is the developer of Black Myth Wukong.
Speaker 13: Backed by Tencent, backed by Hero Entertainment, how it could
Speaker 13: just have developed this game for years on end and
Speaker 13: then have it come out at the top of.
Speaker 5: Every chart, Okay, well every chart.
Speaker 4: The other data set I was tracking was Sony PlayStation
Speaker 4: five sales on Ali Barba the seven days through August twentieth,
Speaker 4: and it was top of the consumer Electronics tree playerborn
Speaker 4: PS five and PC. What does that tell us about
Speaker 4: the Chinese game player right now, the Chinese consumer that
Speaker 4: loves video games, Lisa, Well, it.
Speaker 8: Tells us that they are discerning.
Speaker 13: It tells us that they have money to spend when
Speaker 13: they want to spend it, and it tells us that
Speaker 13: they will spend that money on things that.
Speaker 10: Are high quality.
Speaker 13: So I think that for other game developers worldwide looking
Speaker 13: to tackle this.
Speaker 8: Market, there is opportunity there right now.
Speaker 13: Blackmith Wukong does have one of the coveted government issued
Speaker 13: ISBN licenses permitting it to have domestic distribution, but its
Speaker 13: primary source of distribution in China today is Steam International,
Speaker 13: and for Steam International, the ISBN is not really relevant,
Speaker 13: so this is still a way for game companies to
Speaker 13: distribute games in China.
Speaker 3: Therefore, is a government going to assess what seems to
Speaker 3: be a phenomenal first day.
Speaker 13: Well, I think the government will assess this as a
Speaker 13: victory for a Chinese based developer and one that is
Speaker 13: going to certainly be a leader among the expul pack
Speaker 13: of games that are being exported from China to the
Speaker 13: rest of the world. This is a single player PC
Speaker 13: offline game, meaning it's a premium game. You pay for
Speaker 13: it up front and there are no in game purchases.
Speaker 13: So this is something really amazing because most of the
Speaker 13: success of games in China has.
Speaker 8: Been for free to play or with in app.
Speaker 13: Purchases this type of thing, and most of the hits
Speaker 13: have been on mobile. This is a PC based single
Speaker 13: player game, and just to give you some point of reference,
Speaker 13: by the NIQUE China Games and Streaming Tracker, one of
Speaker 13: the tools that we use to measure the market.
Speaker 8: It's our proprietary tool.
Speaker 13: We track streams on dou Huya and Billy Billy and
Speaker 13: there were twenty nine million viewers by Nico's algorithmic approximation
Speaker 13: of viewers of this game out of one hundred and
Speaker 13: thirty million viewers of all streamed games on those platforms
Speaker 13: on August twentieth, So that was really remarkable. You know,
Speaker 13: almost twenty five percent of all gamers who are watching
Speaker 13: streams of games are watching this.
Speaker 4: Game, Lisa, developed by Game Science and Hung Joe. I
Speaker 4: got so much marketing for this, particularly through the PS app.
Speaker 4: Do you think, just to extend Caroline's question, this is
Speaker 4: going to be a national champion for China that they'll say,
Speaker 4: what a success you've got here on our hands?
Speaker 5: Yeah?
Speaker 2: Sure.
Speaker 13: I think this is one of the big successes not
Speaker 13: only of China but of PC offline games kind of globally,
Speaker 13: and it happens to be from China, and it happens
Speaker 13: to be from a relatively unknown studio called Game Science.
Speaker 8: And similarly, Genchin Impact.
Speaker 13: Had been released by Mijoyo a couple of years back,
Speaker 13: and it, too, Blue Doors passed everyone's expectations and was
Speaker 13: a national you know, big hit that went global and
Speaker 13: lots of people love the game. Genshin Impact, so Mijoyo
Speaker 13: also came out with that game as their first big hit.
Speaker 13: And now we see game Science doing the same thing.
Speaker 13: We've seen lots of tencent games do this. We've seen
Speaker 13: lots of Netti's games do this. And speaking of Nettie's,
Speaker 13: their big long standing hit of twenty years is Fantasy
Speaker 13: Westward Journey. And Fantasy Westward Journey is a cultural mythical
Speaker 13: history based game about you know, journey to the West
Speaker 13: and legend of.
Speaker 8: The Monkey King.
Speaker 13: And that is the same theme that we see here
Speaker 13: in Black Myth Wukong. And this theme has been very
Speaker 13: popular among Chinese gamers forever and now we see that again.
Speaker 13: It doesn't get tired that the game gamers don't get
Speaker 13: tied of it.
Speaker 8: This is something that they love to play.
Speaker 4: If I can find just a couple of hours this week,
Speaker 4: I will play. Lisa Costmas Hansen, CEO NICO Partners, thank
Speaker 4: you so much for coming back. Barck and Michelle Obama
Speaker 4: made their appearance on the second night of the Democratic
Speaker 4: National Convention, blasting Republican nominee Donald Trump while painting Vice
Speaker 4: President Kamala Harris is the heir of their historic political legacy.
Speaker 4: I want to bring in Bloombose Kadie Liones for more.
Speaker 4: And no matter which social media platform you looked on
Speaker 4: the clips were shared, a lot of people had a
Speaker 4: lot of comments. Is there any summary of what was
Speaker 4: said on stage?
Speaker 15: Well, we have to keep in mind here ed that
Speaker 15: the Obamas, both of them, are some of the most
Speaker 15: popular figures in modern democratic politics. Their approval reading among
Speaker 15: those in the Democratic Party is north of ninety percent.
Speaker 15: Michelle Obama, in Particulkiller is kind of more so even
Speaker 15: a cultural figure than she was a former First Lady,
Speaker 15: given the resonance of her book that published a few
Speaker 15: years ago, in the tour that came along with thousands
Speaker 15: of people, she certainly has an ability to kind of
Speaker 15: resonate with the American populace, and of course as a
Speaker 15: hometown girl in Chicago, her speech was very much one
Speaker 15: that seemed targeted at getting people to actually.
Speaker 2: Turn out to vote.
Speaker 15: Both she and her husband, the former President Barack Obama,
Speaker 15: kind of warned about these ideas of complacency, essentially saying
Speaker 15: that this is going to be a tough fight. Michelle Obama,
Speaker 15: calling on voters to do something, while Barack Obama, for
Speaker 15: his part, talked more about his relationship with Joe Biden.
Speaker 15: Of course, has Biden kind of gave his farewell address
Speaker 15: on night one of the convention that went acknowledge and
Speaker 15: Biden also. Obama rather had some pretty sharp attacks for
Speaker 15: Donald Trump, talking about what he dubbed his weird obsession
Speaker 15: with crowd size, talking about how he's been whining for
Speaker 15: years and that it's getting stale for American voters. So
Speaker 15: certainly it was fiery, And of course the Obamas have
Speaker 15: had this kind of social media power that we have seen.
Speaker 15: They really were the first kind of internet campaign, if
Speaker 15: you will, back in two thousand and eight, and so
Speaker 15: some of these resonating moments on social media we've certainly
Speaker 15: seen playing out. And keeping in mind as well that
Speaker 15: in that convention hall there are hundreds of social media influencers,
Speaker 15: some of which have gotten actual speaking slots at this convention.
Speaker 3: Katie lyones this like tech nuance on what was a
Speaker 3: big night for the DNC. Now, let's discuss the impact
Speaker 3: of the election on the tech landscape on bench capital
Speaker 3: in particular, Marlin Nichols is with US Managing General partner
Speaker 3: at mac Bench Capital, one of the signatories of VC's
Speaker 3: for Kamala, and I mean just quickly to start us
Speaker 3: off with the DNC and the energy there at the moment,
Speaker 3: what are you seeing? How is it you hearing anything
Speaker 3: from a policy perspective that speaks to your industry.
Speaker 16: Yeah, I think there's still a lot to be said
Speaker 16: and disclose on the actual policy. But my perspective is
Speaker 16: Kamala is from the Bay Area, she was Aga California.
Speaker 16: She knows tech. She's been an advocate and a supporter
Speaker 16: of tech for a long time, and I'll expect that
Speaker 16: to change anytime soon.
Speaker 4: Modern A lot has been made of the idea that
Speaker 4: Kamala Harris is from from the Bay We also had
Speaker 4: a lot of people on the show that that say, well,
Speaker 4: jd Vance was a bench Capitalist. You know, here's the
Speaker 4: experience of backing entrepreneurs. Therefore might be better for a
Speaker 4: startup leader for for an entrepreneurial environment.
Speaker 5: How would you respond to that?
Speaker 16: I'll say, this election to me is it's it's about
Speaker 16: more than just you know, what's going to happen for tech.
Speaker 16: I think tech is going to be okay, right. This
Speaker 16: election to me is about human rights and freedom in
Speaker 16: unifying the country, and I feel like Kamala is a
Speaker 16: better choice in that respect. I also think she's the
Speaker 16: most qualified candidate running, right. I mentioned she was an
Speaker 16: ag she's part of the Senate, and she's been vice
Speaker 16: president in a you know, in an administration that had
Speaker 16: to do a lot of tournaments from a lot of
Speaker 16: harm that was done from the administration prior. So that's
Speaker 16: why I was I'm supportive of Kamala and why I
Speaker 16: was a signer of the petition.
Speaker 3: That human rights element speaks a lot to ultimately what
Speaker 3: the work you've been doing within MAC Venture Capital because
Speaker 3: you are backing founders from diverse backgrounds, you are doing
Speaker 3: the work to not only be a majority black led team,
Speaker 3: but also then put your money to work there too.
Speaker 3: What sort of outside performance do you therefore get from that?
Speaker 3: As you speak to you're putting your money and vote
Speaker 3: behind Kamala not just because of what she looks like
Speaker 3: and how she identifies, but also the experience she has.
Speaker 5: Yeah.
Speaker 16: I mean, for us, we've always tried to build a
Speaker 16: fund that was one hundred percent meritocratic, right, and I
Speaker 16: think that's the way that the world should work. Right,
Speaker 16: despite your skin color, your gender, et cetera. If you
Speaker 16: are the most capable and you're building the thing that
Speaker 16: matters the most for the majority of the world, then
Speaker 16: you should get the funding. You should have the opportunity
Speaker 16: to build that company.
Speaker 5: And that's the.
Speaker 16: Philosophy that we've employed at at MAC from the beginning
Speaker 16: and it served us pretty well.
Speaker 4: Marlon and I want to just ask how things are
Speaker 4: going at the firm to twenty twenty two. You have
Speaker 4: your sophomore fund double your inaugural fund. You've had two
Speaker 4: years to invest, go and see what's out there.
Speaker 5: How's that gone?
Speaker 16: Yeah, I mean I've put our track rocket up against
Speaker 16: any other fund. You know, we're investing out of our
Speaker 16: third fund now, all in for managing just around six
Speaker 16: hundred million, which I think makes us the largest seat
Speaker 16: seat stage fund in Los Angeles and one of the
Speaker 16: largest in the country. I think things are going pretty well.
Speaker 3: Let's talk a little bit about being in LA and
Speaker 3: therefore some of the areas you've been allocating and first
Speaker 3: comes to mind as the entertainment space, and they're like,
Speaker 3: but I'm sure that you've also been looking at artificial intelligence.
Speaker 3: What are valuations like when you're taking those two separate
Speaker 3: areas in industry groups.
Speaker 16: Yeah, you know, fortunately at the stage, valuations haven't jumped
Speaker 16: or or declined too much. It's been pretty steady. You're
Speaker 16: the range is roughly you know, ten million post money
Speaker 16: to about twenty five and it's it's pretty it stayed
Speaker 16: pretty flat there, even if it's an AI company. So
Speaker 16: so we hadn't we weren't really too affected by the
Speaker 16: major jumps in valuation that you're seeing at Series A
Speaker 16: and beyond.
Speaker 10: AI is a hot area for.
Speaker 16: Everyone right now, and obviously we're we're investing that. We've
Speaker 16: been investing in that area for over ten years now.
Speaker 16: I have over ten years now the fund since our inception.
Speaker 10: So yeah, you.
Speaker 16: Know, markets, uh, you know, rise and fall and we
Speaker 16: just try to be steady.
Speaker 4: Marlon Nichols, Managing general partner at matt Bench Capital. Great
Speaker 4: to have you here on Bloomberg Technology.
Speaker 5: Thank you.
Speaker 4: Now. Coming out, Serious XM signs a multi year deal
Speaker 4: for the cool Her Daddy podcast. Interesting conversation coming out.
Speaker 4: This is Bloomberg Technology.
Speaker 3: Let's just talk about Serious XM after it signed a
Speaker 3: multi year deal for Alex Cooper's Cooler Daddy podcast and
Speaker 3: network of shows. Now it will give the satellite radio
Speaker 3: company the exclusive rights to sell ads on the audio
Speaker 3: and the video as you see here versions of her show,
Speaker 3: as well as bonus content and events, and not only
Speaker 3: her show, but those of other contributors to the Unwell
Speaker 3: network like Alex Earl as well Ashley Carmen joins us
Speaker 3: more for a few and our audience they'll be like,
Speaker 3: who's Alex Cooper, Who's Alex el What are we talking
Speaker 3: about here? This is a really gen z demographic, But
Speaker 3: it means she's got one of what the seventh most
Speaker 3: listened to podcast in the US.
Speaker 17: Yes, this first quarter she's had a huge show call.
Speaker 17: Her Daddy's been around for years. She had an exclusive
Speaker 17: deal with Spotify that had been going on for the
Speaker 17: past four years, I believe, And recently she took some
Speaker 17: of the money she made in Spotify and started her
Speaker 17: own network with a lot of TikTok YouTube stars.
Speaker 2: So again, a young demographic.
Speaker 4: What I'm fascinated about in the world of podcasts and
Speaker 4: podcasts is if we use cool her daddy as the
Speaker 4: example is, who are the power brokers that get the
Speaker 4: deals done? But how does something like this come together?
Speaker 17: Yeah, that's a great question. Well, Alex Cooper's agent is
Speaker 17: Aren Rosenbaum from UTA. He is definitely one of the
Speaker 17: power brokers in podcasting. He has signed deals for Alex Cooper,
Speaker 17: Ashley Flowers of Crime Junkie, also with SYRIASXM, and many
Speaker 17: many other podcasters like Guy raz of how I built this,
Speaker 17: so many others who work with UTA, and of course
Speaker 17: all the agencies have podcast agents as well.
Speaker 3: What's wild is that, Yeah, his a one year performers
Speaker 3: a SYRIXXM. It's down twenty four percent, but yesterday I
Speaker 3: added basically more than eight hundred million dollars in market
Speaker 3: capitalization through this one deal. Syrus has been aggressive and
Speaker 3: also got into smartness another one hundred million dollar amount written.
Speaker 2: Is this the new price tag for a successful podcast?
Speaker 17: It was really the way the business was operating actually
Speaker 17: like four years ago, and Spotify got into the space,
Speaker 17: But recently we haven't seen as many of these splashy deals.
Speaker 17: Serious XM is really the one out there that's being aggressive,
Speaker 17: paying these big bills and focusing on the star talent
Speaker 17: because I think they really see an opportunity where Howard
Speaker 17: Stearns's contract is coming up they're losing subscribers. They really
Speaker 17: need to bring in a younger demographic, and I think
Speaker 17: the way they see that they're able to do that
Speaker 17: is through these younger podcast stars.
Speaker 5: So these are high profile very quickly.
Speaker 4: Actually examples of leaving Spotify is that a worry in exodus, So.
Speaker 17: Yeah, some of these folks have left Spotify. Spotify has
Speaker 17: really just changed its operating mission. I mean, they were
Speaker 17: very very very aggressive in the podcast space, but since
Speaker 17: then they've now really focused on efficiency and being profitable
Speaker 17: and having a better margin, and so we've seen their
Speaker 17: business actually do very well as they've backed away from
Speaker 17: some of these high profile podcast deals.
Speaker 4: Bloomberg's actually common terrific sporting as always.
Speaker 3: Thank you some big deals to finish off this edition
Speaker 3: of the Bloomberg Technology.
Speaker 4: Yet don't forget recap on the podcast. You can find
Speaker 4: it on the Bloomberg terminal as well as on Apple,
Speaker 4: Spotify and iHeart that does it.
Speaker 5: This is Bloomberg Technology